Triennial review results in simplifications proposed to FRS 102

News types: Consultation Announcement

Published: 23 March 2017

PN 16/17

Proposals for incremental improvements and clarifications to FRS 102 have been published today by the Financial Reporting Council (FRC).

The proposals in Financial Reporting Exposure Draft (FRED) 67 have arisen as a result of the triennial review of FRS 102, and after taking account of stakeholder feedback on the implementation of FRS 102.  The principal amendments proposed are simplifications designed to make it more cost-effective to apply and easier to use FRS 102.

The principal amendments proposed include:
  • Simplifying the accounting for directors’ loans by small entities by no longer requiring a market rate of interest to be estimated
  • Requiring fewer intangible assets to be separated from goodwill in a business combination, and;
  • Permitting investment property rented to another group entity to be measured based on cost (rather than fair value). 
In addition, amendments proposed to the classification of financial instruments will allow more of them to be measured based on cost (rather than fair value) and fewer entities will be classified as financial institutions required to provide enhanced disclosures about financial instruments.

Paul George, Executive Director, Corporate Governance and Reporting, said,

“Based on stakeholder feedback, and other outreach, we believe that FRS 102 is working well in practice, but there are a small number of areas where a significant improvement could be made to the cost-effectiveness of FRS 102 without loss of useful information.”


Consequential amendments are proposed to the other UK and Ireland accounting standards for consistency with FRS 102.

Responses to FRED 67 should be provided to [email protected] by 30 June 2017. The FRC aims to finalise the amendments in December 2017, with an effective date of accounting periods beginning on or after 1 January 2019.  Early application will be permitted.

Notes to editors:
  1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the Competent Authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
  2. The following documents are referred to above:

    • FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and

    • FRED 67 Draft amendments to FRS 102 – Triennial review 2017 – Incremental improvements and clarifications.

  3. FRS 102 was issued in March 2013 and effective for accounting periods beginning on or after 1 January 2015. The FRC indicated it would be subject to review every three years, although the date of the initial review was subsequently extended by a year.The FRC will consider whether, and if so how, to incorporate elements of the expected loss model of IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases as a separate phase of the triennial review. Any proposals for changes will only be made after consideration of responses received to the Consultation Document issued in September 2016.  Any resulting amendments to FRS 102 will not be effective before 1 January 2022.

Related links:
FRS 102 - Staff Draft
Triennial Review 2017 - At A Glance

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